Housing market starting to slow
Property asking prices stood virtually still in June compared to May, suggesting the housing market could be starting to slow.
This month prices have risen by just 0.1%, or £272, taking the average asking price to £272,275. The price growth compares to a 3.6% rise in May, according to the research from Rightmove.
While demand for property usually cools over the summer months, this 0.1% increase is well below the June average of 0.6% for the past 10 years.
More regions have seen prices drop in June, with all areas of the north of England seeing a fall. The average house price in the North was £152,790 - down by 0.8% on last month.
In London, average house prices have dropped by 0.5% to £589,776, fuelled by a combination of buyer reluctance and a surge in the number of new sellers, which has gone up by 23.2% in the capital this month.
In the rest of the UK, there has also been a rise in the number of sellers - up 9.6% on the same time last year. All regions have also recorded a month-on-month increase in properties coming on to market.
Besides the traditional drop in buyers during the summer months, the signs are that many committed and motivated buyers have already bought properties, while the tighter lending criteria introduced under the Mortgage Market Review (MMR) has dampened demand – at least initially, as lenders struggle with the extra paperwork and new requirements for consistency in underwriting standards. The most recent Bank of England mortgage approval figures for April were 17% lower than those in January.
Run out of steam
Miles Shipside, Rightmove director and housing market analyst, comments: "The London market powers the rest of the UK but is starting to run out of steam. While the legacy of rises in central London continues to ripple out to its better-value commuter-belt, fuelling price increases in all southern regions, London itself is now marking time.
"It's an example to the rest of the country of what happens when affordability and common sense get stretched too far. Through luck or judgement it appears that the timing of the Mortgage Market Review, more property for sale in all regions, and a tail-off in pent-up buyer demand are alleviating some of the upwards price pressure. This will come as a relief to the Governor of the Bank of England and the Financial Policy Committee, who have cited an over-heating housing market as a serious threat to economic recovery and have further powers to use should it get out of hand."
Shipside adds: "Many serious buyers who were waiting in the wings have now bought and moved in, taking a slug out of the pent-up demand for a few years to come, and the consequent chatter on the street is that quality buyers are now thinner on the ground. The next wave of buyers may have less motivation or ability to buy and sellers are going to have to be sensitive to their local market and not pitch their asking prices too high as choosy buyers will not arrange to come and visit."